Thursday February 22 2007
Sun St. Kitts – Nevis
Officials of the Ministry of Finance, in particular, the Inland Revenue Department (IRD) are still wrestling with finding a rate for the new property tax.
At the start of this month, the IRD caught the interest of property owners when it announced that the new property tax would be reduced from five per cent on the rental value to less than one per cent of the market value.
At a press conference days later, the Prime Minister Dr. Denzil Douglas further disclosed that the new tax rate would be less than 0.5 per cent.
Still, at that time, an exact figure was not given. The government has repeatedly made it clear that the new rate would not create hardship and burden, but rather it was a means of ensuring that all property owners were assessed fairly.While property owners are anxiously waiting for an announcement on the new rate, the IRD is hoping that the Ministry of Finance will make up its mind and come to a swift decision.
This apparent dilemma has caused property owners to conclude that the government was caught between a rock and a hard place in arriving at a final rate.
It appears as if the government has realised, as one analyst had predicted, that it was not possible for the new rate to be lower than the previous one because the market value of a property would be obviously much higher. It is, therefore, expected that the market value would provide a larger platform on which to apply a given percentage and hence would yield higher tax revenues overall.
A series of meetings, 15 so far, held across the island and organised by the IRD to educate property owners on how the new rate will be calculated have created more confusion than comprehension.
The IRD’s calculation for the time being is based on hypothesis, using different rates between 0.1 per cent to 0.5 per cent and various market values to arrive at possible property tax bills.
However, there have been mixed reactions from property owners to this approach.
“What we have been trying to do is give a number of scenarios, for example, the market value and different rates between 0.1 per cent and 0.5 per cent to see what their possible taxes would be.
“Some people are comfortable with that situation, but some others are not. They would much prefer if they had the exact rate,” Tax Specialist at the IRD, Gary Edwards, told the SUN.
Property owners can expect their property tax bills by early June.